Getting the right mortage or remortgage deal can save you £100s. But ask your own bank or building society and it'll just try to flog mortgages from its very limited range, making it pot luck whether you get a good deal.
To beat this, we've built two techniques to quickly check the WHOLE market for free, and find the best deal for you.
We've just done a big update to this guide. We know there's lots of great knowledge among our readers, so please suggest any changes or questions in the Cheap Mortgage Finding discussion.
Mortgage finding need-to-knows
The bigger your deposit, the cheaper the mortgage deal
The best deals are available to borrowers with the lowest 'loan-to-value' ratios - that is, if you are borrowing a smaller percentage of what the house is worth.
So for instance, if have a deposit of 40% or more, you can take your pick of mortgage deals. But if you only have 10% of the property's value saved, you have a more limited range of mortgages to choose from.
Where this comes into play as a big deal is if your savings come close to one of the big boundaries for rates getting lower - these are generally 90%, 75% or 60% LTVs (ie, 10%, 25% or 40% deposits).
If you currently have slightly less than needed to reach one of those (or any 5% boundary, as they all have some impact), it's worth trying to scrape together the extra. Or if you're buying somewhere new shaving a little more off the cost, to get you across the threshold.
If you've got an 'agreement in principle', you DON'T have to stick with it
If you followed our house buying guide, you'll have an agreement in principle (AIP) from a lender already. But if it took you a while to find somewhere to buy, or to have your offer accepted, your AIP lender may no longer have the best rates.
However, an agreement in principle is just that. Importantly, it doesn't lock you in to getting your mortgage with the same lender. So if you've had an offer on a property accepted, then it could be time to search the market again. And if you use a fees-free broker, you can get someone to do the legwork for you and not pay a penny (to them, at least).
Watch out for big fees - you can pay upfront but they'll cost more
It's no longer just about the rate when picking a mortgage - a myriad of fees come as part of the package.
Those that are part of the actual mortgage product itself (such as an arrangement fee, which can be as much as £2,000, and a booking fee, usually of up to a few hundred pounds) can normally be added to what you borrow. Be very careful though - you'll be paying them back over a long time which really ramps up their overall cost, and could affect your LTV.
Other fees aren't paid to the mortgage lender, but are for other services such as home surveys, valuations and legal work. These usually CAN'T be added to the amount you borrow, so you need to cash upfront. There's a full breakdown in our House Buying guide.
Fixed rates give long term surety of cost
As well as the cost (factoring in both rate and fees), the other key decision to make in terms of affordability is whether the rate you get is fixed, or variable (eg, discount or tracker rates) which can vary either at the bank's whim or in line with the Bank of England base rate.
The most important thing to remember always has been, and remains...
With a fixed rate, you have the surety of knowing EXACTLY what your mortgage repayments will be for that time.
In year's past, the interaction between fixed and discount rates made this a potential tricky decision. Right now the pendulum has swung more towards fixed deals, which are at their cheapest ever. In many cases they are lower than discount rates, even before any potential future increases to variable deals.
Interest-only means you NEED a separate plan to pay off your debt
With an interest-only mortgage, your monthly payment does not chip away at your actual debt. Instead, it just covers the cost of borrowing the money. After 25 years of paying the interest on a £100,000 loan, you would still owe £100,000.
A repayment mortgage, while it costs more each month, has the big bonus that as well as covering the interest it pays off the original debt too, meaning you'd owe nothing at the end.
Unless you have a compelling reason, repayment is the way forward. It's the only option which guarantees you are actually paying off some of your debt every month. With an interest-only mortgage, you just pay the interest, and should set up a method (eg, savings) to build up enough cash to pay off the actual cost of the property - and you may need to get some proper financial advice.
Brokers and lenders are rarely cheapest for add-on products you need
Mortgage brokers are a great way to find the right mortgage, and obviously you'll need to deal with a lender in order to get the money you need to borrow. However, there's absolutely no obligation for you to take ANY extra services from them.
Whether it is the costs of moving house - conveyancing, surveyors etc - or add-on financial products such as home insurance or mortgage life insurance, you can often save many £100s a year by sorting them yourself. See the Cheap House Buying, Cheap Home Insurance, Mortgage Life Assurance and Mortgage Payment Protection guides for more info.
Arm yourself with a free mortgage guide!
This guide is about how to find the cheapest mortgage deal, not about the decisions you need to take to decide what type you need. And while advisers are helpful, the final decision is always yours, and you should understand it fully.
To help, there are two detailed MoneySaving mortgage guides: one for first-time buyers and the other for those looking for a cheaper deal. Both are available either as a free printed guide sent by post, or as an instant PDF download.
Benchmark a top mortgage rate
Before starting, you need a quick idea of what's available so you know if what a broker's offering is a good deal or not. First, existing mortgage holders should see what their current lender's best deal is.
After that, and for new borrowers, the web's a powerhouse to benchmark a good deal. Use these comparisons to find what's available with your deposit and intended property value.
|The top online mortgage information sources||Comparison services
(interactive mortgage picking services)
The Money Advice Service
|Best buy tables
(simple lists of top products, much quicker, but less tailored)
|Savills, London & Country|
How to find the cheapest mortgage
The crux here is that you want to cover every mortgage lender to find the mortgage that suits you best. There are two ways to do this - the first takes a little more work but is free, while the second charges a fee but should be slightly easier.
Both ways require using a broker, and below we explain how to find the one that suits you. The route you choose depends on where the balance lies for you between cost and hassle.
Mortgage brokers scour the market to find you a good mortgage deal. By using one, not only do you swiftly cover a huge slew of lenders, but a broker gives added clout with lenders to ease your acceptance and an extra layer of protection if things go wrong.
It's most important to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend brokers. They may even work from the same office. But crucially, you're not tied into using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations - many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price. But not all brokers are the same. Some are limited in what they can offer you, so there are three crucial questions to ask.
1 Are you 'whole of market'?Can it source you ANY UK mortgage?
Though this question sounds straightforward, there are (confusingly) actually three possible answers:
"NO." Some brokers operate off a small panel of lenders, so they search from fewer deals. This makes it simpler and cheaper for them to operate.
"YES." Brokers regulated as 'whole of market' must compare every mortgage available to brokers to find the best deals when you ask them to. However, as the italics suggest, there are other deals NOT available to brokers which they will still miss.
"YES, we search every mortgage available in the UK." - This is the newest sort of broker. As well as the standard 'whole of market' deals, these usually also cover lenders who don't normally sell their products via brokers, and branch-only deals from all lenders.
As this is more than a little complex, to make sure you know exactly what you are getting, it may be better to refine the question to: "Could you, right now, source a mortgage for me from any available UK mortgage lender?"
2 Are you an IFA?ONLY if you have an endowment, but crucial if you do
If you took out your first mortgage in the '80s or '90s, it's possible you were sold an endowment mortgage. In effect, this is an interest-only deal where at the same time you pay into a type of investment called an endowment, which is designed to eventually repay the capital.
Sadly, a huge number of endowments performed poorly, leaving people with big shortfalls, meaning the investment won't pay off the mortgage as planned. Anyone who's been impacted by this should first check whether they were mis-sold the endowment.
If you want help dealing with or selling an underperforming endowment, you don't want a broker, you need to find a qualified Independent Financial Adviser.
3 Do you charge a fee? How much will this all cost?
Brokers have two possible sources of income.
Commission. Lenders pay brokers a 'procuration fee' of 0.25% to 0.5% of the mortgage's value, rising to 1% for mortgages if you've poor credit. So, on a £150,000 mortgage, brokers typically earn £375 to £1,500.
Brokers may also charge you a fee directly. No reputable broker should charge more than around 1% of the mortgage value, even for 'sub-prime' customers. If yours charges more, walk away.
Fees can be charged at any point in the process, providing they inform you initially. Yet avoid using any broker that charges you big fees before completion; if you have to walk away from the purchase, you'll be likely to still have to pay them.
As this is a MoneySaving site, we've always said the preference is not to pay a fee if you don't have to. For this, you're looking for a fees-free whole of market broker, which makes its cash from commission but can search out a good deal from a wide range of lenders, then checking the non-broker deals on top.
However, there are two big instances when a fee may reflect good value for money.
If you want face-to-face advice... Then search your local area. Just make sure they're whole of market, and that any fee charged is affordable and value for money. It's not the worst thing to spend money on, especially to have someone you trust to get you a decent mortgage.
If you want one that finds 'non-broker' deals. When a broker recommends a mortgage not on normal 'whole of market' tables, they don't make commission. The brokers we've found which include ALL mortgages charge fees, to compensate for the chance they won't get paid once they've found a deal.
Independent doesn't actually mean it's independent..!
Many brokers charge fees AND take commission. However, to call themselves an Independent Mortgage Broker, they must offer an option to pay fees only, with all the commission earned being rebated to the customer.
In practice, this is bunkum. What tends to happen is this: they offer to let you pay EITHER a "1% fee in full and rebate the 0.35% commission" OR they'll suggest you can just pay a "0.65% fee and keep all the commission". In other words, not a lot of difference.
Worse still, it means a truly whole of market broker fees-free broker (only taking commission), can't call itself independent, even though it is providing the same advice and is cheaper.
The top UK mortgage brokers
Now you know what you are looking for, as we can't review every mortgage broker in the UK, we've concentrated on some of the big ones that have nationwide scope, plus ways to find smaller brokers. Similarly, if you have any doubts about a broker, find a different one - there's nothing wrong with talking to several before you settle on one.
Fees-free, 'whole of market'*London & Country mortgages
- How do I speak to them? Phone only
- What lenders will they check? Officially 'whole of market', but misses some biggies
- Cost: FREE
Specialist phone broker London & Country* never charges a fee, and is a regulated 'whole of market' broker. This means it will check the vast majority of lenders, but for total coverage you will need to check the remaining ones yourself.
L&C has been a top pick on MSE for many years, and we have received consistently strong feedback from people who have used it. If you've used L&C let us know about your experiences.
The advantage of only dealing with lenders who make deals available through brokers is that L&C will be able to help you through the whole process, in terms of filling in forms, information and support. The brokers you deal with may also tell you about mortgages from lenders it can't deal with for you, but there's no absolute guarantee.
EVERY UK lender checked (£199 fee if you apply)Which? Mortgage Advisers
- How do I speak to them? Phone only
- What lenders will they check? Every UK lender
- Cost: £199, paid on application if you apply through Which? Mortgage Advisers.
Consumer organisation Which? has set up the Which? Mortgage Advisers service, which offers a phone-based broker service for £199. For the fee, it guarantees to check all lenders' deals, even if they are not normally available through brokers - so this includes perennially cheaper providers such as HSBC, Post Office, ING Direct and Tesco.
The flipside is that Which? won't be able to transact these deals for you - if it tells you about a deal where it can't handle the paperwork, and you decide to go ahead, you'll be on your own.
Also, we have hardly any feedback on this service so far. Even though Which? itself is a big name, there's no guarantee of how this will all work. So if you use it, please tell us your experiences.
Face-to-face advicefind a good local mortgage broker
- How do I speak to them? Face-to-face usually
- What lenders will they check? It depends on the one you find
- Cost: Varies massively, always check.
If you prefer face to face, try and find a local broker that offers it fees-free; there should be quite a few. Websites like FindaPro or Unbiased.co.uk both list brokers, you could ask a friend or even use the phone book - but it's crucial you know what you're getting.
Give them a call, and ask the three questions in the picking a broker section to ensure they fit your bill. Make sure each broker you look at can advise from the whole of the market, and is fees-free (if that's what you are looking for)
For those wanting a more informal route, this website's forum includes a large Mortgage Board where some helpful mortgage brokers voluntarily answer questions - it's an easy non-committal start option.
Many are fees-free, whole-of-market mortgage brokers, so if they do help you, there is no reason not to ask them to sort your mortgage for you (always ask them the three questions first, though).
However, as always, the golden rule is to seek more than one opinion before deciding.
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Got credit problems? No need to go specialist - use the brokers above
If you've had credit problems, whether mild or severe (see the Credit Ratings guide), and are trying to sort a mortgage, be very wary of going to the 'specialist poor credit' brokers who advertise everywhere.
These often charge very high fees as customers tend to think that's all they can get. There's absolutely no need to go to a specialist though; most normal brokers (including the ones listed above) also deal with what's called the 'sub-prime' market too, and at the same fee rates that they normally charge.
You can check more than one broker, to find all exclusive deals
All the national brokers above only charge upon completion of the mortgage, and as it's always good practice to seek more than one opinion, why not try a few? Though do check that the brokers aren't doing a credit search on your file, as then shopping around may actually hurt your credit score, meaning you get a worse deal (see Credit Scoring guide).
The other benefit of this is that different brokers often have exclusive deals from lenders (though there may be a small fee for 'booking' these). The big national brokers have their own deals and local brokers may offer exclusives via wider 'broker networks' which negotiate deals for them. Always weigh up the benefit of the exclusive deal against any broker fee you may need to pay.
You could get cashback, but ONLY for super-savvy borrowers
There's another, slightly tougher to understand option, which can sometimes beat fees-free. These are brokers which charge fees, but then rebate all the commission received. Thus if it's a relatively low fee (a few hundred) and the commission it gets is higher, you'd actually be quids in. This is more likely the more you are borrowing - if it's a low amount, the rebate may well be lower than the fee.
If your broker offers a rebate, it's worth considering; ask for info on the size of the fee and a rough guess to what the commission will be. These will help you make your choice. This table from the Legal & General Mortgage Club gives an indication of the 'proc' fee your broker might be getting.
If - and only if - you really know what you're doing, then it's possible to forgo using a broker for advice. Instead, if it's a deal that pays brokers commission, you can get the money it earns put into your own pocket.
A few websites allow you to do this, and there's not much between them.
The easiest of these to use is MoneyBackMortages, which has whole of market coverage, and pays up to 75% of the commission it earns as cashback. This usually comes to between £100 and £300 per £100,000 of mortgage, and there's a calculator on the site to show how much you'll get.
This is ONLY for the very money-savvy, who know and can identify exactly the right mortgage. There's no advice from the site about which mortgage is the cheapest for you. Do remember...
For most people, a broker's weight on your side for a mortgage transaction worth £100,000s is worth more than a few hundred quid in cashback.
The more loophole-savvy of you may have worked out that you could, of course, go to a fees-free broker (or even a fee broker as long as the fee isn't paid until transaction), then process its recommendation via a cashback site.
This is a balance of ethics and practicality. By doing this you have taken the broker's time but not allowed it to be recompensed for its advice by gaining a fee.
Sadly, some lenders have retreated from the broker market to cut costs and avoid paying commission. They fall into two camps: some simply don't allow brokers to access any of their deals, while others reserve a portion of their deals for direct sales only.
If you went with a broker that promises to tell you about all deals on the market, whether they get paid for them or not, this part should already have been done. It may be worth using a double check, but it's likely you've already found the best deal for you.
If you used a standard whole-of-market broker, it only has to look at the mortgages available to it, so while some whole-of-market brokers (including the ones mentioned above) will tell you if you can get a better deal available by going direct to a lender, there is no regulation forcing them to do this.
Lenders that don't operate through brokers.
The main ones are ING Direct, Tesco Bank, Post Office, HSBC and First Direct. Plus the Yorkshire Building Society and Britannia don't pay brokers a fee, and while true whole of market brokers should include them in a comparison and signpost you to them, they don't have to offer to transact them for you.
Lenders that don't offer all their deals through brokers.
This is where it gets tricky, and you'll really need to do some legwork. A few lenders, including Nationwide and Halifax, now put some deals through brokers and offer some only direct, just to show there's nothing like keeping things simple!
This in itself isn't that new, but a recent trend is that the direct deals can be much more competitive (though not always!). Usefully, MoneySupermarket* and Google's* mortgage comparisons list the best deals for you, and then tell you if they're available through brokers or only direct.
Moneyfacts and the Money Advice Service mortgage searches also include most branch-only direct deals from lenders in their tables, so are great starting points to see if you can beat the broker deals.
Exclusive deals from other brokers.
In the final category are the deals which are available exclusively through other brokers, as they often negotiate their own deals with lenders. Hopefully by trying a few brokers in the first place, you'll have already been through these.